Kemet files suit against AVX to protect trade secrets

MANHASSET, N.Y.  Kemet Corp. has filed suit against AVX Corp., seeking to protect trade secrets related to the development and manufacture of tantalum polymer capacitors.

The lawsuit, filed in the South Carolina Court of Common Pleas, marks the first time in recent memory the rival passive component suppliers have become entangled in litigation against one another.

Kemet (Greenville, S.C.) is best known as a supplier of tantalum capacitors, and began manufacturing tantalum capacitors with a polymer construction in 1999. Tantalum polymer capacitors constitute the fastest growing segment of the tantalum capacitor market, according to Kemet.

AVX (Myrtle Beach, S.C.) is best known for ceramic capacitors, but also offers integrated passives, resonators, and tantalum and niobium capacitors.
In the lawsuit, Kemet alleges AVX had access to its trade secrets after hiring a scientist working in Kemet's Technology group. The suit alleges that through this scientist, certain Kemet trade secrets related to tantalum polymer capacitor manufacturing were acquired by AVX, which recently introduced similar products on a commercial basis.
Kemet seeks judgment against AVX for actual and exemplary damages, attorney's fees, and injunctive relief to eliminate any commercial advantage AVX could gain from accessing Kemet's trade secrets.
For both companies, the stakes from the lawsuit could be significant as they try to maintain market share in a changing passive components market.
During the industry downturn several years ago, both Kemet and AVX struggled with declining earnings as falling capacitor prices put both companies at a disadvantage compared to offshore suppliers based in the Far East.

Even a rebound in the mobile phone market did not help the U.S. based suppliers as the capacitors used in those products were small case-size commodity parts that carry tiny margins.

To avoid competing directly with offshore suppliers, U.S. and European suppliers have steered their product lines toward higher technology, higher performance passives.